The Outlook for Sydney Dwelling Values: Affordability ... · 3 Sydney Inner City Greater Sydney 2,458 8,976 8.2% 4 Strathfield - Burwood - AshfieldGreater Sydney 3,012 6,257 18.7%

Sydney’s housing market The Outlook for Sydney Dwelling Values:

Affordability, Supply Levels and Rental Markets

September 2016

© 2016 CoreLogic, Inc. ■ Proprietary & Confidential

© 2016 CoreLogic, Inc. ■ Proprietary & Confidential 2

Source: CoreLogic, ABS, RBA, ASX

Residential real estate underpins Australia's

wealth and has reached $6.7 trillion in overall

value

As at the end of August 2016

Residential Real Estate

$6.7 Trillion

Australian Superannuation

$2.1 Trillion

Australian Listed Stocks

$1.6 Trillion

Commercial Real Estate

$0.85 Trillion

Number of dwellings

9.7 million

Outstanding

mortgage debt

$1.6 trillion

Household wealth

held in housing

51.6%

Total sales p.a.

454,651

Gross value of

sales p.a.

$261.6 billion

Two cycles of growth post-GFC which has seen

substantial capital gains in Sydney and Melbourne


Source: CoreLogic

Cumulative capital gains since January 2009

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%Sydney

Melbourne

Brisbane

Adelaide

Perth

Hobart

Darwin

Canberra

Past 12 months 10 year average annual

9.4%

9.1%

4.4%

3.1%

-4.2%

6.5%

-4.2%

7.6%

7.0%

-5% 0% 5% 10% 15%

Sydney

Melbourne

Brisbane

Adelaide

Perth

Hobart

Darwin

Canberra

Combined capitals

Strong annual capital gains in Sydney and

Melbourne are substantially higher than the

decade average rate of growth

| © 2016 CoreLogic, Inc. ■ Proprietary & Confidential 6

Capital gain: Average over 10 years v past 12 months Change in capital city dwelling values,

12 months to Jul 2016

Source: CoreLogic


Source: CoreLogic

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Aug-01 Aug-04 Aug-07 Aug-10 Aug-13 Aug-16

Annual change in dwelling values Sydney home values

have increased by

+3.9% over the past

three months and

are +9.4% higher

over the past year.

The annual rate of

value growth has

slowed from a peak

of +18.4% in July

2015

Sydney, number of settled house and unit sales

(with rolling annual average)

Despite strong capital gains, transaction numbers

are broadly trending lower across Sydney


Source: CoreLogic

Low advertised stock levels can partly explain the

fall away in transaction numbers across Sydney

Number of properties advertised for sale, Sydney (rolling 28 day count)


Source: CoreLogic

A sharp decline in investment lending has added

to the slowdown in transaction numbers… but

recent data shows a strong rebound in

investment lending

Investors as a % of all new mortgage

commitments

Investment

Owner occupier

Refi


Source: CoreLogic, ABS


Low affordability is also likely to be dampening

housing demand across Sydney

Source: CoreLogic, ANU

8.0 8.0

9.7

6.3 6.5 7.2

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Sydney

Houses Units

5.97.3 7.7

5.26.5 6.1

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Melbourne

Houses Units

5.7 6.3 6.1

4.9 5.44.8

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Brisbane

Houses Units

5.87.0 6.5

4.65.7

5.1

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Adelaide

Houses Units

6.1 6.3 5.8

5.2 5.5 4.7

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Perth

Houses Units

5.6 6.2 5.9

4.55.1 4.7

0

2

4

6

8

10

Jun

-02

Jun

-04

Jun

-06

Jun

-08

Jun

-10

Jun

-12

Jun

-14

Jun

-16

Hobart

Houses Units


Buying a detached house in Sydney is becoming

out of reach for many segments of the market


$1m+ $900k

to

$999k

$800k

to

$899k

$700k

to

$799k

$600k

to

$699k

$500k

to

$599k

$400k

to

$499k

$300k

to

$399k

$200k

to

$299k

<$200k 10km 20km 50km

Median house values Median unit values

Unit approvals

remains a large

proportion of

the growing

supply pipeline

House approvals

Unit approvals

70%

55%

64%

32%




A significant number of units are set to settle

across Sydney over the next two years…

Source: CoreLogic Settlement Risk Report

CityNew units next 12

months

New units next 24

months

Potential unit stock uplift

over next 2 years

Sydney 34,967 84,343 4.5%

Melbourne 31,806 82,374 4.5%

Brisbane 17,471 45,471 5.4%

Perth 6,897 18,347 2.2%

Adelaide 2,714 6,529 1.4%

Canberra 2,392 5,571 3.3%

Darwin 1,005 1,288 2.7%

Hobart 647 1,022 1.2% 4.5%4.5%

5.4%2.2%

1.4%3.3%

2.7%1.2%

SydneyMelbourne

BrisbanePerth

AdelaideCanberra

DarwinHobart

Potential unit stock uplift over next

2 years


… however the inner city areas of Melbourne and

Brisbane look riskier than Sydney regions.

Source: CoreLogic Settlement Risk Report

SA3 Region CityNew units next 12

months

New units next 24

months

Potential unit stock uplift

over next 2 years

1 Melbourne City Greater Melbourne 7,176 16,761 21.6%

2 Brisbane Inner Greater Brisbane 3,072 9,757 30.4%

3 Sydney Inner City Greater Sydney 2,458 8,976 8.2%

4 Strathfield - Burwood - Ashfield Greater Sydney 3,012 6,257 18.7%

5 Brisbane Inner - North Greater Brisbane 3,311 6,088 29.7%

6 Parramatta Greater Sydney 1,836 5,947 19.4%

7 Southport Rest of Qld 3,463 5,788 45.6%

8 Ryde - Hunters Hill Greater Sydney 1,954 4,693 17.3%

9 Holland Park - Yeronga Greater Brisbane 1,474 4,552 37.0%

10 Boroondara Greater Melbourne 1,700 3,902 12.8%

11 Port Phillip Greater Melbourne 1,001 3,844 8.3%

12 Glen Eira Greater Melbourne 1,471 3,770 12.2%

13 Perth City Greater Perth 1,173 3,649 9.6%

14 Auburn Greater Sydney 2,195 3,622 20.4%

15 Brunswick - Coburg Greater Melbourne 1,263 3,459 20.4%

Top 15 SA3 regions nationally for pending apartment supply


Source: CoreLogic

Loss making resales are rising across the

Melbourne and Brisbane inner city unit

markets, but remain low across Sydney

% of loss making resales, key inner city unit markets

Perth inner: 24.6%

Melbourne inner: 19.1%

Brisbane inner: 11.1%

Sydney City and inner South: 1.6%


Source: CoreLogic

Proportion of ‘off the plan’ valuations where the valuation is

lower than the contract price, June 2016

Valuation activity shows a large % of ‘off the plan’

unit settlements are coming in under contract

value


Sydney rental growth was flat over the past 12

months, pushing gross rental yields to new

record lows

Annual change weekly dwelling rents

Source: CoreLogic

Gross rental yields


About Us

CoreLogic Australia is a wholly owned subsidiary of CoreLogic (NYSE: CLGX), which is the largest property data and analytics

company in the world. CoreLogic provides property information, analytics and services across Australia, New Zealand and Asia,

and recently expanded its service offering through the purchase of project activity and building cost information provider Cordell.

With Australia’s most comprehensive property databases, the company’s combined data offering is derived from public,

contributory and proprietary sources and includes over 500 million decision points spanning over three decades of collection,

providing detailed coverage of property and other encumbrances such as tenancy, location, hazard risk and related performance

information.

With over 20,000 customers and 150,000 end users, CoreLogic is the leading provider of property data, analytics and related

services to consumers, investors, real estate, mortgage, finance, banking, building services, insurance, developers, wealth

management and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory

and geo spatial services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and

mitigate risk. CoreLogic employs over 650 people across Australia and in New Zealand. For more information call 1300 734 318 or

visit www.corelogic.com.au

CoreLogic produces an advanced suite of housing market analytics that provides key insights for understanding housing market

conditions at a granular geographic level. Granular data is often used for portfolio analysis and benchmarking, risk assessments

and understanding development feasibility and market sizing. It gives industry professionals valuable modules which provide

essential analytics and insights for decision making and strategy formation within the residential property asset class. We can tailor

reports to suit your business requirements.

Call us on 1300 734 318 or email us at [email protected] or visit us at www.corelogic.com.au


Granular Data and Analytics

Market Scorecard: Monitor and measure market share and performance of real estate agents at an individual office or a Franchise

brand level across Australia. Identify the competing brands and independents at a suburb, postcode, user defined territory and

State level. Easily locate growth opportunities and market hotspots, and view the performance of the established offices in these

new areas of interest.

Market Trends: Detailed housing market indicators down to the suburb level, with data in time series or snapshot and segmented

across houses, units and land. The Market Trends data includes key housing market metrics such as median prices, median

values, transaction volumes, rental statistics, vendor metrics such as average selling time and vendor discounting rates.

CoreLogic RP Data Indices: The suite of CoreLogic RP Data Indices range from simple market measurements such as

median prices through to repeat sales indices and our flagship hedonic home value indices. The CoreLogic RP Data Hedonic index

has been specifically designed to track the value of a portfolio of properties over time and is relied upon by Australian regulators

and industry as the most up to date and accurate measurement of housing market performance.

Economist Pack: A suite of indices and indicators designed specifically for Australian economic commentators who require the

most up to date and detailed view of housing market conditions. The economist pack includes the CoreLogic RP Data Hedonic

indices for capital cities and ‘rest of state’ indices, the stratified hedonic index, hedonic total return index, auction clearance rates

and median prices.

Investor Concentration Report: Understanding ownership concentrations is an important part of assessing risk. Areas with high

investor concentrations are typically allocated higher risk ratings due to the over-representation of a particular segment of the

market. Through a series of rules and logic, CoreLogic RP Data has flagged the likely ownership type of every residential property

nationally as either owner occupied, investor owned or government owned.

Mortgage Market Trend Report: CoreLogic RP Data is in a unique position to monitor mortgage related housing market

activity. Transaction volumes, dwelling values and mortgage related valuation events all comprise our Mortgage market

trend report which provides an invaluable tool for mortgage industry benchmarking and strategy.


Disclaimer

In compiling this publication, RP Data Pty Ltd trading as CoreLogic has relied upon information supplied by a number of external sources. CoreLogic does not warrant its

accuracy or completeness and to the full extent allowed by law excludes liability in contract, tort or otherwise, for any loss or damage sustained by subscribers, or by any

other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause

whatsoever and limits any liability it may have to the amount paid to CoreLogic for the supply of such information.

Queensland Data

Based on or contains data provided by the State of Queensland (Department of Natural Resources and Mines) 2016. In consideration of the State permitting use of this

data you acknowledge and agree that the State gives no warranty in relation to the data (including accuracy, reliability, completeness, currency or suitability) and accepts

no liability (including without limitation, liability in negligence) for any loss, damage or costs (including consequential damage) relating to any use of the data. Data must not

be used for direct marketing or be used in breach of the privacy laws.

South Australian Data

This information is based on data supplied by the South Australian Government and is published by permission. The South Australian Government does not accept any

responsibility for the accuracy or completeness of the published information or suitability for any purpose of the published information or the underlying data.

New South Wales Data

Contains property sales information provided under licence from the Land and Property Information (“LPI”). CoreLogic is authorised as a Property Sales Information

provider by the LPI.

Victorian Data

The State of Victoria owns the copyright in the Property Sales Data which constitutes the basis of this report and reproduction of that data in any way without the consent of

the State of Victoria will constitute a breach of the Copyright Act 1968 (Cth). The State of Victoria does not warrant the accuracy or completeness of the information

contained in this report and any person using or relying upon such information does so on the basis that the State of Victoria accepts no responsibility or liability whatsoever

for any errors, faults, defects or omissions in the information supplied.

Western Australian Data

Based on information provided by and with the permission of the Western Australian Land Information Authority (2015) trading as Landgate.

Australian Capital Territory Data

The Territory Data is the property of the Australian Capital Territory. No part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying,

recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Enquiries should be directed to: Director, Customer

Services ACT Planning and Land Authority GPO Box 1908 Canberra ACT 2601.

Tasmanian Data

This product incorporates data that is copyright owned by the Crown in Right of Tasmania. The data has been used in the product with the permission of the Crown in Right

of Tasmania. The Crown in Right of Tasmania and its employees and agents:

a) give no warranty regarding the data's accuracy, completeness, currency or suitability for any particular purpose; and

b) do not accept liability howsoever arising, including but not limited to negligence for any loss resulting from the use of or reliance upon the data.

Base data from the LIST © State of Tasmania http://www.thelist.tas.gov.au


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Documents

The Outlook for Sydney Dwelling Values: Affordability ... · 3 Sydney Inner City Greater Sydney 2,458 8,976 8.2% 4 Strathfield - Burwood - AshfieldGreater Sydney 3,012 6,257 18.7%